The last couple of weeks have been exciting for us pension geeks. Most of the time, people try to change the subject when I tell them what I do (it turns out that there are people out there who don’t think longevity is as fascinating as I do), but in the last week or so, they’ve begun to realise just how exciting pensions are!
It started with the Budget, which made pensions sufficiently interesting for me to be quizzed about the Annual Allowance over an Americano and a bacon sandwich during a café stop on a bike ride.
And then the French got in on the act! In France, the idea of increasing the minimum pension age to 64 is enough to bring the people out onto the streets. Like most people, the French want to have longer lives, but they don’t want to spend any more time working.
I don’t think that retirement and pensions will stop being headline news. As the retired population grows, it seems inevitable that their issues will continue to grab the headlines. I expect that some of the issues which we discuss as retirement planners will make it on to the news agenda. Now, I’m no journalist, but here are some headline predictions (and what they really mean):
- 85 year old forced to mend own roof (failure to include housing repairs in retirement budget).
- We got identical returns, but my pension ran out (planning didn’t take account of sequence of returns risk).
- I wish I’d spent my money (being too cautious with spending in early retirement)
Whilst it will make me more popular if the media starts reporting about the “retirement crisis”, there are also some serious issues why pensions and retirement have become something that people want to talk about. The people who are currently on the cusp of retirement, and those who have recently retired, are likely to have much smaller guaranteed incomes (such as state pensions and final salary pensions) than their predecessors, and they find themselves in the uncomfortable position of relying on investments to provide them with money to spend for an uncertain, but, hopefully, long period of time. This is a challenge which most people haven’t faced before, and, for many, “pension freedom” sounds a lot better in theory than it works out in practice, particularly if they haven’t been given the tools they need to make it work.
I’d rather be talking about the Tour of Flanders at a café stop, but I’m prepared to give that up if people start thinking my job is interesting!
Philip Wise | email@example.com
Managing Director and Chartered Financial Planner